5 Ways to Save for Retirement Starting Now
If you’re wondering when the best time to start saving for retirement is, here’s your answer: Now. What you may not realize is that this can be easy to do, even if you are on a limited budget. The sooner you start, the less cash you’ll need to invest down the road. Compound interest helps you build your wealth faster, so you benefit more the earlier you start. How do you make it happen? Here are five steps you can take right now.
1. Develop a debt repayment plan
To save the most for retirement, you should work to get out from under any debt you’ve accumulated, especially debt with high interest rates. Create a spreadsheet charting the debt you owe including for vehicles, mortgages, personal loans, and credit cards. Determine how much you can set aside each month to pay down one line of credit at a time. Aim for the debt with the highest interest rate first.
2. Talk to Your Employer
Some employers provide retirement accounts. Employer-sponsored retirement accounts have a number of advantages, including lower fees for you. This includes 401(k) and 403(k) plans, as well as others. If you have access, find out if your employer matches your contributions. If so, that’s extra money in your pocket.
3. Establish an IRA
Whether you have an employer-sponsored retirement plan or not, you’ll benefit from an Individual Retirement Account (IRA). Your local bank can help you to set one up and navigate the options, including choosing between a ROTH or Traditional IRA. Once you get it open, you can start moving money into it right away.
4. Make Retirement Contributions Automatic
This is important. You do not want to count on yourself to make your deposits on time. Rather, you’ll want to set up automatic deposits. When you do this, you ensure money is getting into your account on a regular basis. Aim for deposits occurring once every pay period. Your bank can help you link your retirement account to your checking account to make this possible.
5. Find Ways to Save
Tucking away extra money can help. For example, if you receive a large tax refund or a bonus this year, consider adding it to your retirement account. It could help you save faster and ensure that you get better long-term results.
Most importantly, discuss your retirement saving goals with a financial planner at your local community bank. Create a plan that works for you and addresses your short term and long term goals for building wealth and minimizing debt.